Yes it does.

Outsourcing encourages competition and gets business's to strive to try and out do each other. It makes them fight and try to steal each others customers, work hard and get more and more people to notice their company or follow their website. It is a huge competition between business's and people.

Outsourcing does not encourage competition.

Outsourcing not only does not encourage competition but it destroys it in the sense. Companies who have the money can outsource their needs to other countries at a fraction of the cost in such a large scale. This makes it so that small businesses can not compete with this and makes it harder for them to create a living because the big company is selling it for a cheaper price since they can make it for cheap.